Morning Download
Personal finance + economics + markets
Good morning investors! Yesterday wasn’t a very good day for the market. Most sectors closed lower while cryptos continued to move flat.
👎🏽 Not so fun fact: September has been the worst performing month, on average, going back nearly a century. This, however, doesn’t mean there is nothing to look forward to in September and it’s not a guarantee.
🇧🇷 Happy Independence Day to our Brazilian readers!
Today we cover:
What’s happening to mortgage rates? 🏡
The market’s down again. 🛑
All about ETFs. 💰
🔈 Audio version: Apple Podcasts | Spotify
📊 Economy and News
Mortgage demand hits a new low
📉 Mortgage demand is down despite mortgage interest rates pulling back slightly last week.
The mortgage application volume saw a decline of 2.9% last week, compared with the previous week.
“Mortgage applications declined to the lowest level since December 1996, despite a drop in mortgage rates,” said Joel Kan, an MBA economist. “Rates remained more than a full percentage point higher than a year ago, despite mixed data on the health of the economy and signs of a cooling job market.”
The drop: Applications to refinance a home loan fell 5%, about 30% lower when compared to the same period in 2022.
“Prospective buyers remain on the sidelines due to low housing inventory and elevated mortgage rates,” Kan added.
Values to decrease: The housing marketing is starting to soften up and while rates continue to be in the range of 7%, some experts believe that prices will now begin to decrease.
Global hits:
A dispute in Australia might make gas more expensive in Europe.
The EU names digital gatekeepers: Google, Meta, Amazon, and more.
China’s Evergrande soars 70% after Country Garden avoids bankruptcy.
📈 Stocks
S&P 500 4,465.48 (-0.70%)
DJIA 34,443.19 (-0.57%)
NASDAQ 15,371.44 (-0.88%)
VIX 14.36 (2.50%)
* Prices as of Sep 7th, 12:20 AM UTC
The market’s red again
Stocks sold off Wednesday, continuing the sluggish start to September, over interest rates fears.
Treasury yields jumped, weighing on risk assets again. The yield on the 2-year Treasury note was last up more than 5 basis points and trading above the 5% level. In addition, recent economic reports suggest that prices aren't moving as desired.
The prices component of the ISM manufacturing index jumped 5.8 points to 48.4.
What does it mean? A number under 50 signifies a shrinking of the manufacturing economy.
👀 Eyes on Fed: There is now fear that the Fed may increase rates in November, which is increasing fear.
The image below shows yesterday’s biggest movers:
🔐 Crypto
Bitcoin $25,694.50 (-0.35%)
Ethereum $1,632,95 (-0.11%)
Total market cap $1.04T (-0.16%)
* Prices as of Sep 7th, 12:20 AM UTC
You can count Bitcoin billionaires on your finger
There are only six Bitcoin billionaires in the world, according to a new report.
This comes as a shocker given that 425 million people currently use cryptocurrencies. However, it is believed that the number of billionaires is down due to reasons such as the market crash. Bitcoin is currently trading below $26K after hitting nearly $65K in 2021.
On the other hand: Another report found that over half of Gen Z has invested in digital currencies.
However, 75% of Americans do not currently trust cryptocurrencies due to the risk of data theft and breaches.
Also, about 45% of people who have invested in digital coins say they haven’t reached their investment goals and only 15% said their investments had exceeded expectations.
Crypto fun facts: The Henley report found that 88,200 people have crypto assets worth at least $1 million — less than 1% of overall crypto users. Surprisingly, less than 40,500 of them hold their investments in Bitcoin. Furthermore, only 182 investors have crypto holdings valued at over $100 million.
In total, there are 22 billionaires but only 6 hold Bitcoin worth over $1 billion.
🇰🇵 North Korean hackers are now stealing crypto to fund the country’s nuclear program and have this year robbed cryptos worth $200 billion, according to Chainalysis.
💵 Personal Finance
All about Exchange Traded Funds (ETFs)
An Exchange Traded Fund, more commonly known as ETF, is a type of investment that involves investing in a variety of securities all at once.
In simple words, it is a "collection of hundreds or thousands of stocks or bonds, managed by experts, in a single fund that trades on major stock exchanges, like the New York Stock Exchange, Nasdaq, and Chicago Board Options Exchange.”
Why invest in ETFs: If you want to keep your investing simple and employ a “set it and forget it strategy,” simply dollar cost averaging into an ETF of Index Fund is the best way to get diversification.
Types of ETFs
Stock ETFs
As the name suggests, stock ETFs consist of stocks and offer long-term growth; however, they can be risky. They can include stocks from a variety of industries, which helps investors diversify.
Commodity ETFs
These ETFs consist of commodities such as precious metals, oil, and gas. These ETFs can be complicated as a lot is involved so understand if these contain futures contracts and if you will have physical ownership of any assets.
Bond ETFs
Bond ETFs consist of bonds but they do not come with a maturity date. These ETFs are used to generate passive income.
International ETFs
Used for diversifications, international ETFs give investors access to global markets and may consist of a variety of assets such as bonds and stocks.
Sector ETFs
Sector ETFs work for people interested in specific sectors such as health care and finance. These ETFs, however, are risky but can be very rewarding.
Leveraged ETFs
Not as popular as ETFs mentioned above, leveraged ETFs track an existing index and aim to offer higher returns than the index. So, if the S&P 500 offers 2% returns, leverage ETF would offer higher returns despite consisting of S&P 500 companies. However, on the downside, your losses will be more if the index doesn’t move in your desired direction.
Pros and Cons
How to invest in ETFs?
Here’s how to invest in an ETF:
Start by finding an investing platform that offers ETFs. Examples include eToro, AJ Bell, and Freetrade. Make sure to look at factors such as fees, minimum investment, and available ETFs. Furthermore, you can try traditional brokers.
Research available ETFs and find what you are interested in. Make sure to look at factors such as included assets, minimum investment, average returns, and fund manager.
Think of an investing strategy such as dollar-cost averaging. Also, if this is your first time investing then start slow.
Next, buy the ETF you are interested in and hold onto it.
Watch this video for more on ETFs, including fees, which are typically much cheaper than mutual funds:
💰 Be a Better Investor
“Money is always eager and ready to work for anyone who is ready to employ it.”
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👩🏽⚖️ Legal Stuff
Nothing in this newsletter is financial advice. Always do your own research and think for yourself.